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Macdonald 'upset' about political fallout

Former NSW mining minister Ian Macdonald says the first time he learned the Obeids owned property over a key coal exploration tenement was when he read about it in a newspaper.

The Independent Commission Against Corruption (ICAC) is examining whether Mr Macdonald, 63, rigged a coal mining tender process in the Bylong Valley in 2008 to benefit Labor powerbroker Eddie Obeid and his family.

It has been claimed Mr Macdonald divulged inside information to the Obeids that was worth up to $100 million to the family.

In his second day of evidence on Tuesday, Mr Macdonald admitted he knew the Obeids owned property in the Bylong Valley.

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But he said he took no steps to find out whether the Mt Penny mining tenement was being created over land the Obeids owned in the coal-rich area.

"Are you telling us that you took no measures to try to ascertain whether you were creating an exploration licence over the Obeid property?" counsel assisting the commissioner, Geoffrey Watson SC, asked.

"That would be right," Mr Macdonald replied.

He said he discovered the Obeids owned property over the Mt Penny tenement only when he read it in the newspapers.

He said he was "pretty upset" when he found out about the Obeid family's interest in Mt Penny.

"I could see the political fallout from that immediately," he told the inquiry.

He also conceded he did not disclose to cabinet that the Mt Penny tenement "fell smack bang on top of Eddie Obeid's farm".

Mr Macdonald is currently being taken through 40 pieces of evidence that Mr Watson argues links the now disgraced former minister to allegedly corrupt activity relating to the opening up of the Bylong Valley to coal mining.

He has previously told the ICAC that it was just by chance that the Mt Penny mining tenement was created over the Obeids' land in the Bylong Valley.

It has been alleged that Mr Macdonald stood to make millions of dollars in kickbacks related to the controversial tender process.